U.S. Home Values Struggling to Stay At Fair Value

8/17/2011 12:47PM

The News Hub covers homes in U.S. markets struggling to remain at or above fair value. Also, China's astonishingly strong demand for corn. And, Syria is accused of making threats against dissidents...in the U.S. AP Photo.

This transcript has been automatically generated and may not be 100% accurate.

... the thinking he ... declining no wonder ... Americans are struggling welcome to the NIT that I'm Kelly Evans joined Ansett ... three writer John Jannarone welcome ... of course if you are fortunate ... to be quite to that point plunge on my settling into a downstairs the summer continues to this ... um let's first take a look at new data which suggests home prices have fallen below fair value and a third of major markets and interest joins us ... on that take a look at this are a welcome that ... stunts is the lead in this this study used you were present elsewhere ... where will Home prices of traditional Intrepid comes pretty closely ... if you look at the period before the housing boom of course that became ... way out of whack during the housing boom ... of but if you look at a fifteen year period of two thousand ... home prices were about ... two point nine times and comes in the United States ... by the peak of a bubble around two thousand five ... home prices were up five times and ... now we're back to three point three so we're pretty close to ... the long run average linger what's interesting is that identified several places where it actually fallen below that long run average ... what are those places by the one where there are a hundred free market to look to about one-third of them could be considered undervalued on its price to income ... econometric ... of Las Vegas Detroit to places for home prices have fallen fifty or sixty percent ... not a huge surprise that you would see ... housing undervalued in those markets but ... of Las Vegas a good example where we added two point seven placed income average where one top up or both five that during the bubble now worth two point one so about twenty five percent ... below their historical norm ... when you look at the ... relationship of prices to income as you say the question here is has the housing market over corrected on health research has been Jim swung too far given direction and ... you we may be below city's historical norms but ... is that really a surprise given the distortions we just in the sport but it's it's absolute not a surprise I mean this is kind of the market ... looking for better or worse ... perhaps the same way that it didn't work so well during the boom ... now what side you have all these homes that have to sell into foreclosure ... you don't have enough buyers in places like Las Vegas people trapped in the homes they don't have equity they can't sell ... and so that means the Kambah ... and so there's there's really just the more working for this promise to take a long time and that ... it's pretty painful for this housing market's have too many homes ... and not enough buyers ... and there's nothing to say that they're going to stop falling when you get to that ... you know that normal historic average most of these places will keep falling ... if you look at California in nineteen ninety staff of the ... many housing bubble bigger in the late eighties ... when prices fall for the seven years away on top of the ... late nineties that you really begin to get left out of ... the housing boom that we just interest or were so ... that it's reasonable take long for ... what is with ... this makes me wonder about the implications for our consumer spending and we know you are you know ... maybe thirteen trillion on um was wiped off the household balance sheet and Tern prices going down future in that that could mean ... do you think that this mean I'm imagining that this in combination with volatility in markets is really bad news for consumer spending and ... it's not just your income it's you know how enriching the ... way to think that's a big reason why the economy has been ... ministers will cut us leverage for the past two years people are going to spend if there are ... at their home equity this is no houses became Americans credit store of savings for that ... for the postwar period are now that's been wiped off a lot of people so ... that has knock on effect on to some consumer spending a small business growth ... you can get a home equity loan demand ... for more money in your small business for retirement ... so this this this is damaging for a lot of places that ... that was also there should also know there is still a lot of housing markets that look overvalued ... yes that is with the with the ACCC honours in a beach where ... home prices are still ... fifty percent above what that historic average has been so ... but not all those places are going have to fall Washington D C has a pretty good job market so they may stabilize at a higher level ... than the than the pre bubble period ... but for some of these places that stands to reason just look and see prices fall into it when she was also there are a lot of regional differences and what an interesting question is when the housing market started to collapse in which you see places like ... Nevada the next Florida the hats and that the biggest run ups in and this was just client within the first to emerge in this increase was suggested no in fact ... they're the ones last week when leftists for this lasting legacy in the stars from an experience all ... the places that that kind of blow up ... you're going to have them exit the downturn of the different age the Detroit Cleveland this are economically depressed Rust all regions the job prospects are free ... those places will not recover for a long time ... some parts of California The world repeated some parts of Nevada and Arizona ... have warped which runs through the foreclosure inventory much much more quickly than say for the worse still haven't ... just months and months of the shadow inventory of potential for poachers ... and so I've been EXC all exited a little bit different Keynesian that's gotta be very problematic policy is rightly concerned but he saw in the regional numbers in all all the virtual use writer now you've got this disparity among us how you handle for what we all went up together for the boom we all got together the bus but we're not all the supermarkets can exit at the same time are the same pace ... and so when we talk about a ... national housing market ... that really doesn't up that doesn't work so well and ... I hate to dress more details on that circulates recovery your market is doing Dennis J dot com that that thing ... let's check in now with the over at Dankner hands it was a reminder Europe now ... I believe we wanna do is ... look at yet another much value in euro zone meeting that is disappointed markets you can take a look at how Europe is trading about halfway through ... the day here we've seen sunshine from from major indexes Germany's downtowns Forelle joins us now the trials ... the big news this morning is the lack of news for the meeting between ongoing Merkel and Nicolas Sarkozy ... I explained where were things now stand after these two leaders met ... good morning well I think the market the kitchen world I've been meaning it may be that we are predicting that any gathering here of the leaders ... they tend to ... disappointment when I'm followed through on ... yet what ended up happening was when the airport could be ... I'm president of the budget proposal in nearly all of which had already been presented before him get in on the kitchen they're moving for time to think that investors most wanted the ... which is first an expansion of the year to rescue facility in tech and some sort of movement toward Eurobond collected ... I'm borrowing the ... country those two things ... what investors want that the thing that ... would give them more comfort that their weak European countries will be able to pay back the debt again I'm up to one thousand and eleven ... has died ... contended that the leaders rejected quite ... plainly both ... rescue fund expansion and Europe on ... any new investors wanting to send it really is when taxpayers once ... lot of respect for you at compared with women are ... angry that there is I would be pro at ... German taxpayers ... the fund therefore only if he can it be the ... largest question here is known to have you ... on the whole of the Week paper that calling them from the band has been a ... Porsche resolution on this front for a long time and in the July number again to look at the weekend Jen out as mentioning how stocks over there looking about halfway through the trading day ... Sir mix to generally speaking up little bit in the UK and and and down in Germany ... on this is another bit of a shrug their Charles it would seem on but certainly not much sign ... of Cerrell or threatening ... jaws and teeth into more bonbons with a market once in her member last week we didn't give me the response to equities in ornaments are going through the government bonds ... I mean it's hard to say in it and the way that mean how old how long Zynga can work is that with the market's waiting for or what ... for the edition of the market here ... and there are always correlate with government bond market ... you obviously want the on line by the year by somebody else ... equity market ... every ... day and highly correlated with the bond market the story in Spain and Italy were relatively good performance ... on relatively ... good performance over the difficult last week or so ... compared to the German investor ... I'm I'm a pretty tight ... but any of those ... people were holding government on her Ligue one of the ... commitment by from institution to continue buying the bombed otherwise ... there they find themselves caught between the situation of the Kanimbla them ... DNDN Intel's now looking ahead every sense a waiting for the next to us the Medicare are what's going to determine at this point the market's rate ... well he noted that the thing that investors are looking out for in the political dynamic between the European Central Bank and the government European tougher Banker route I'm reluctantly into the role of the bond buyer ... supporting the secondary market to buy ... it does not want to be there ... to make clear that the market is very long ... on the government also don't want to do it so ... it can be a tug of war over the coming weeks and months to see who can get it in this role ... I mean and if it turned out to be winning the game of chicken and nobody can stroll through the third quarter ... yet we also doesn't discipline in terms of the eurozone aggro secures Germany in particular how much a worry is that they are slowing now could ripple through the euro zone ... what I would think that they were and are interconnected economy to slow growth in Germany plummet across the euro zone very bad ... idea in a lot of the countries that do the math it very difficult to work out of the large cap aisles ... and that almost always require some level of growth that the party's ... future revenue to continue to pay down debt and countries that don't experience Grow that have a very difficult finding a debt burden ... I'm so people can call crime ... by Charles Forelle in Brussels to island's forests thanks Ralph ... and the U S markets now this morning Paul vignette joins us on said to do that all welcome ... I suppose you're you're asserts that the trading day here but on the second season figures there just Crosson wire the surprises but what's the impact it's backed up well look too obvious disappointment that meeting yesterday was a total toll on me this idea ... of governance Council for your interim government over ... on the governing councils ... it was just ... those that hold all the good he was a wet noodle ... all ... the markets didn't like it no one like it Asian stocks were down on disappointment there Scott tilted over ... the stock futures are higher here this morning at the point that out the Dow's up about thirty things out of a strong gain ... so that could go either way I what I do think is important is that ... this week in the soap or thought ... of what is volatile its last week which is like saying ... I think a lot of effort on a hot war dead ... and his ways to CA on salt I used to do with this piece of the calmer trading day ... that said part of a patina ... yes indeed we get some some earnings and decided to produce a price index for July is the second country of inflation reports to get this week ... up a little more than expected as all ha ... ha ... you Jadallah going ... to look at the Cortazzo point to offset overall point to the core is up twenty four ... both of those were a little more than the Street expected ... and there ... are still higher than a month ago to sell ... you seen you know that what this basically means is that you see inflation pressure at the wholesale level the producer level producer prices are now on set point two percent during your year that follows import price index its bid for tenders in your in your tomorrow we get ... into the much ballyhooed CPI interactive consumers held on to have three roughly how much of this is funneling through to the prices on the shelves and we all see right now that'll be interesting is you seen a number of times last month situations where consumers not actually means higher prices because the manufacturer with retailers reporting his ... business Council ... in ... him sing at with the Office of coffee that you know it's happening ... across the board and isn't easy because people are uncertain what if that fourteen percent against a seven percent gain in say is that's what is that what's coming for consumers to me ... as we do not necessarily other companies are kind of taking that we've seen and earnings from ... Wal-Mart from others just basically trying to hold the line or keep Lowell ... in this report is that ... with the news that food prices were up ... energy prices were down which we know it all still recruiters top ... but one person Russell's some of this is coming is going to be coming through ... don't really know how much will find up to get some answers tomorrow ... what really matters is ... what that all means for wages and the new look inflation were just the wages ... that's the real tell about where the economy's going right now ... he intends to get it to me that is the most important thing that jobs ... you know that state economy is not great right now everyone is realizing that ... and ... here we told her and she is merely a lot to earnings ratios of thirty report on this fiscal year that among all right so now all the retailers are reporting that Wal-Mart yesterday on Tepco ... as mining at stables in part to the Staples was up sharply ... not as as much to begin a pre good outlooks of the stock is up and see Targa top ... of that today yesterday that cemented AboveNet yet so I mean what did they are doing better Dell reported last night ... earnings were up sharply ... what they said was that the strong corporate ... gearing or are we know whatever ... but there are concerned about the consumer sales ... that really ... for whatever reason people really Coulomb not that that ... that stock is down seven percent premarket ... two-year note was up fifteen percent ... a ... decent number not a big number that you CCL shares down what I ... really like it some concerning obvious concerns there about the economy and how that's going to affect we're here ... um Target Staples LAPD services they were up to Sunday's retailers are reporting good numbers ... what matters is the owl what matters is what they say about the rest of the year that is the real it is also market your story we've seen target today Wal-Mart was up a little but yes it appears as questions you could really getting to share the consumer wallet not all not all bugs are priced in the center right and you know we're all going to shop ... the couple months ago the luxury sector was looking great ... because for whatever reason those ... nail rich folk you rich folk out there papers to go shopping ... now they're starting to start in one week and we can see this sort recounting again where people pull in and start looking for the discounts and sales of all and so ... the rest of the market ... Midori names of the gold winner Paul vignette for all of the market at ten thirty and I think very much ... I'm more troubling is out of Syria this morning after series is the Wall Street Journal has learned that the nation's regime is using staffers around the world to track down some case threatened dissidents ... your Maules joins us by phone now from Dubai ... iron ore morning I'd tell us what you've uncovered and in the situation ... morning low ... of four I meet with the ... gardening world carry ... the lunar for our own reporting of the bow of you that ... even Tom King and ... twelve while working can chew gum and trading income of three hundred and eighteen ... the bark on ... thinking targeted common ... with the ... purple ... feet ... long and hard ... livewire up ... the book and you can continue to work ... we ... believe that ... cold War veteran ... I get to ... know the Obama administration wanted to put the top ... before ... going ... to happen if ... you'd like to note that the ... American ... people ... the point where you can do to make ... their nature ... due to ... low and slowly and ... then also comes a time when violence there is increasing he gives us an update on the situation ... yep sure I think for the week this week to get them out there watching for getting into the weekend I got ... kicked out of the year of the week in the garden ... you know was that it was ... people got the call that one Gerencher all the people that the only thing ... that keep the Potter have been out by the government could do ... to get re opposition members just like that you'll ... learn bout won't talk about oil ... so I'm clearly that that the origin of the Trudeau of the queue for the four week ... period that ... has been ... well known and that he can go to the company ... yet each of the kitten or a phenomenal featuring in ... the ... event your ... heart will play out before the Bell ... Honma Aerie that the current TV the coming year ... but for the hearing be held ... in the peak in population ... I'll cry ... foul when authority from United Nations refugee into me to come to the ... problem of the near future ... I think that by the end of the one that the country ... and ... I'm afraid that if the water clock the trouble with regard to the beach ... while the market will continue to go out and ... getting on the one that you'd think I'd tell us is this is is that ... the threats to dissident's outside of Syrian around the world is the new chapter in this crackdown is the summing it's been happening all off ... a member of the world can begin ... yet the report to be sure there are the example of the income that you love like the new to chalk it couldn't for an opponent of the commission ... the Daily News of the development ... checking her out and buy the land ... one didn't ... do what I can do that I why I've been ... thinking he contends ... that he told me ... wouldn't that ... start ... with what you think of it that one ... of ... the current one ... in Washington ... I think ... what I'm going to travel the kitchen to twenty five while to get out ... of Washington in top form ... he ... acknowledged that to ... go ... no he's not there that ... I can be a government job and I'm deeply for top of that that that that that you ... know it strikes me is ... surprising Syria has discovered how are you know this network around the world and if you look in other places ... where you get with readers under fire lately The I mean ... there are ... the Libyans in the US to war in former members of the Ghadafi regime were speaking openly against Ghadafi ... and are running in any trouble in this isn't just to get off the beaten down so much that he doesn't have the powers are anything like this or what wise it's a different ... which at four thirty ... that that govern our recording what you ... it did he ... know it yet but the Caulfield Cup about ... it ... here in the low and ... I can think of it yet but the ... outlook for ARM ... on how the ... twenty two branches of the gold in the June peak ... hours on people ... who don't know I like ... that that that one branch of ... that that you think of QQQQ like that or go for it ... started in mid March after him ... people should set the crowd ... the LDP a PGA after that you don't want to bring them in part by ... there is a very sort of like an even encounter effect will ... but there's also a very informal um ... the stock market share ... I've been able to rely on that one was ... around the world for what he can do something and very loving the people that you're out of the Kingdom of the Pink going to ... become the target price ... you can't take ... that very thing that would let him return of construction or the government them thinking that the people of the ... potentially lucrative than just ... that boy I'll to the Richmond well ... also in the glow of their care in light of foreign aid ... I've been drinking ... no we think ... the people you talk to that of God that the euro can not afford it ... for me ... pretty neat to hear what we want ... to think that that support their team ... argued Brian Hewitt combined with our hitting the market ... think of me of the unit circle ... at home in the footage from each other until they got me ... thinking because I want one of ... her life ... you know I know in your circle that go into great point lots with us again funded by the master at seeing our thanks much this morning ... corn prices meanwhile just keep climbing as we just on the producer price index this morning dear raised its forecasts for prices and its earnings as well ... as probably because China is a split on to world markets surprisingly big buyer of foreign brands people joins us now ... with the story in today's Wall Street Journal explaining the ramifications of this brand first call ... give us the pretty amazing figures about just how much corn China's been By ... well we saw in July Llewellyn was really incredible moment ... yes ... China in one go but up twenty one million bushels ... which destroyed of pre much every expectation ... that the USDA and the higher for year two thousand and eleven ... receivers Hines in the million dollar question ... whether China was going to become a net importer or ... does it mean when we did know something farmers and traders ... of print readers asking about for awhile ... we saw in two thousand ten China I initially began to move on to the ... global stage yet as a foreign buyer ... many people thought that it is the result of a drought that was going on at the time ... of overseeing this year up recently with twenty one million dollars bushel purges in July ... he really underscore why people been wondering for a long time is the trend is your stay and most economists and traders expect that it is done crops have never been so exciting ... and it's amazing implications that between China's doing is is going to have on the U S consumer to know the answer I mean from an investor's perspective mean you gotta think about what this might mean for a company might use a safe haven like you know ... from ... package food company no craft Heinz Smucker's in these companies aren't you know making sweeteners and corn some reason one for ... the chips were never mind the ... interconnected GSI yourself if you know and this is this is a function of demand in China right which you'd think it is something I would not affect accompanied its focus from its United States but you know ... the rules changing any crime said I wonder is is China recently porting ALPA's CoreNet why these are some recent debate purchase and is there any indication as to why this is been such a long BDX are purchased ... oh ... there are reasons to ... buy or an out of a hard as you say is try is trying to ... restore its of its grain reserves ... China's massive amounts of grain reserves now we don't know exactly how much how high those reserves are at this stage the present state secret in China ... however we do know is it over the past few years ... because of ... that but there are also more recently up because inflation concerns China has been releasing of the strategic grain reserves into the it into the marketplace ... in an effort to keep the prices were down in China ... on up you know the present or has been a key ... factor in ... runaway inflation in China ... and so the government ... um which which falls ... on ... a ... crane reserve the very idea of a level of importance ... is that we need to ... begin importing more time and the U S issues crore Orwell's Argentina well ... we do ... we need to import more more more ... to orders yuan to establish re-establish the prisoners Dan and Brian in ... corn is the big input notches for ... continued dry cleaners John mentioned input into sweeteners that something also of course ... for me it's interesting livestock in China as it is you mention is such a big producer of corn itself is remarkable Minister reach ... high into the US I would imagine is reaching into other parts of the world to the healthy in this demand as its middle class develops more tasting aware of calls ActionAid purchases of these higher end products ... blue it we we know it here previously ... that we as U S consumers rose a crushing the competition for food ... with that with the Chinese to something we haven't seen ... over the course of China's history ... of the hottest party in China has long help with security of domestic food supply being able to ... feed its people at ... the utmost importance as always been at least eighty eight enables you ... have a self sustaining low corn production ... and even Salu couple of years ago on a within a within the next four or so we're seeing now is is really are or ... I wonder with the U S strategic grain reserve his is next to this point given the hype and friends are we've seen poverty rates growing over here ... um certainly food prices out of reach for many has a lot to do it that the number Americans and you know on food stamps continues to climb right ... so will see how that shakes out price feel that the story with us from Beijing frightening so much ... finally this morning Abercrombie is into happy with the situation Mike Sorrentino from the Jersey Shore that is the retailer has offered them an undisclosed sum of money ... to that to the visa cap run the popular MTV and reality show that's a stop wearing of clothing or you can see ... I might get aka the situation ... at the same a an awesome offered other members of the cast of each and just began is forcing the couple weeks ago ... they're in Florence Italy this year and apparently ... of the most recent episode probably featured a pair of neon green ever come this month and the tendency of but seven about million Americans it was in the Wenjiang table as we know this is really funny the things I'm Abercrombie's growth is all overseas this point in its US business to know was once booming that that was very nineteen ninety these days it's places like Italy in the rest of Europe ... clearly new customers and ... I have I remember right I've seen some polls among Italians are not really big fans of the Jersey Shore so to have a tally can prancing around that from the stock has not ... yet there ... sure were unhurt there were there brand potential there but it's also interesting is they're getting a ton of tension has already been just enough to last night ... and that's only gonna help raise brand awareness them around the world as they seek to expand extra mini set yet maybe it's a bad thing is wearing thin out there making the deal with that I mean people just start talking that Abercrombie so they will be in the ... Nabokov effect akin to the status of Mrs Oversea is that that they're doing that well ... I you catch more of course on the eve of what shall I knew that their new show entities J dot